AND IN THE AND IN THE B ETWEEN: Court File No. CV-16-11290-00CL O NTARIO S UPERIOR COURT OF JUSTICE ( COMMERCIAL LIST) I N THE MATTER OF MAPLE BANK GmbH MATTER OF THE WINDING -UP AND RESTRUCTURING ACT, R .S.C. 1985, C.W-11, AS AMENDED MATTER OF THE BANK ACT, S .C. 1991, C.46, AS AMENDED ATTORNEY GENERAL OF CANADA - and - MAPLE BANK GmbH Applicant Respondent FACTUM OF THE LIQUIDATOR KPMG INC. ( Motion returnable December 13, 2017) December 12, 2017 TO: THE SERVICE LIST BORDEN LADNER GERVAIS LLP Barristers & Solicitors Bay Adelaide Centre, East Tower 22 Adelaide Street West, Suite 3400 T oronto ON MSH 4E3 Alex MacFarlane (LSUC No. 28133Q) T el: 416.367.6305 a[email protected]Bevan Brooksbank (LSUC No. 56717U) T el: 416.367.6604 b[email protected]L awyers for KPMG Inc., in its capacity as L iquidator of the business in Canada of Maple Bank GmbH and its assets
Transcript
AND IN THE
AND IN THE
BETWEEN:
Court File No. CV-16-11290-00CL
ONTARIOSUPERIOR COURT OF JUSTICE(COMMERCIAL LIST)
IN THE MATTER OF MAPLE BANK GmbHMATTER OF THE WINDING-UP AND RESTRUCTURING ACT,
R.S.C. 1985, C.W-11, AS AMENDEDMATTER OF THE BANK ACT, S .C. 1991, C.46, AS AMENDED
ATTORNEY GENERAL OF CANADA
- and -
MAPLE BANK GmbH
Applicant
Respondent
FACTUM OF THE LIQUIDATOR KPMG INC.(Motion returnable December 13, 2017)
December 12, 2017
TO: THE SERVICE LIST
BORDEN LADNER GERVAIS LLPBarristers & SolicitorsBay Adelaide Centre, East Tower22 Adelaide Street West, Suite 3400Toronto ON MSH 4E3
Lawyers for KPMG Inc., in its capacity asLiquidator of the business in Canada of MapleBank GmbH and its assets
SERVICE LIST (As at December 11, 2017)
TO: KPMG Inc., in its capacity as Liquidator of the business in Canada of Maple Bank GmbH and its assets 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5
AND TO: Department of Justice Canada | Office of theSuperintendent of Financial Institutions Canada Sun 255 Albert Street, 12th Floor Ottawa, ON K1A 0H2
Lawyers to the Applicant, The Attorney General of Canada
AND TO: Her Majesty the Queen in the Right of the Province of Ontario, as Represented by the Minister of Finance 33 King Street West, 6th Floor Oshawa, ON L1H 8E9
AND TO: Jeff Campbell 483 Brunswick Avenue Toronto, ON M5R 2Z6 [email protected]
AND TO: Linda Lai62 Suncrest Boulevard, Suite 621 Thornhill, ON L3T 7Y6 [email protected]
AND TO: Beatrice Tsang41 Phalen Crescent Scarborough, ON M1V 1Y5 [email protected]
AND TO: Sofia Petrossian321 – 168 Simcoe Street Toronto, ON M5H 4C9 [email protected]
AND TO: Joanna Parina81 Black Creek Drive Markham, ON L6B 0Y4 [email protected]
AND TO: Janice Rickard2175 Countryclub Drive, Unit 1 Burlington, ON L7M 4H9 [email protected]
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AND TO: Vesna Manojlovic1807 Kingston Road Scarborough, ON M1N 1T3 [email protected]
AND TO: Lindsay Chase50 Sunny Glenway, Unit #209 North York, ON M3C 2Z2 [email protected]
AND TO: Jose Dela Cruz52 La Maria Lane Maple, ON L6A 3X2 [email protected]
AND TO: Renat Khousnoutdinov 39 Queens Quay East, Apt. 116 Toronto, ON M5E 0A5 [email protected]
AND TO: Graham Dyke49 Joicey Boulevard Toronto, ON M5M 2S8 [email protected]
AND TO: Yao Fu114 Belinda Square Scarborough, ON M1W 3M2 [email protected]
AND TO: Mary-Ann Noronha 47 Craigmont Drive Toronto, ON M2H 1C8 [email protected]
AND TO: Maple Holdings Canada Limited, Maple Securities Canada Limited and Maple Trade Finance Inc. c/o 79 Wellington Street West, 35th Floor Toronto, ON M5K 1K7
AND TO: Maple Securities U.S.A. Inc., Maple Arbitrage Inc., Maple Trade Finance Corp., Maple Commercial Finance Corp., Maple Partners America Inc., Maple Financial US Holdings Inc., and Maple Group Financial Finance Master Fund II (Cayman)
c/o Maple Securities USA Inc. 525 Washington Boulevard Jersey City, NJ 07310 U.S.A.
AND TO: 1261095 Ontario Limited c/o Corporate Secretary’s Office — National Bank of Canada 600 De La Gauchetiere West, 4th Floor Montreal, QC H3B 4L2
Assistant Secretary Telecopier No. 514.394.9560
AND TO: 4180135 Canada Limited 4180143 Canada Limited 4180151 Canada Limited Midland Group of Companies 22 St. Clair Avenue East Suite 1600 Toronto, ON M4T 2S3
Leslie Gates Telecopier No. 416.960.0711
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COURIER SERVICE LIST
AND TO: National Bank of Canada Dominic ParadisVice-président, Affiares juridiques et secrétaire corporative National Bank of Canada Corporate Secretary's Office, 27th Flr. 600A rue de la Gauchetière O, Montréal, QC H3B 4L2
Phone: 514-394-6751 Fax: 514-394-9560
AND TO: AIG Insurance Company of Canada Financial Lines Claims 120 Bremner Boulevard. Suite 2200 Toronto, ON M5J 0A8
AND TO: Harrington International Holdings Ltd. John Buchanan 37 Harrington Sound Road Hamilton Parish Bermuda CR04
AND TO: Jarnac Financial Products Inc. Chief Executive Officer Aetna Tower, Toronto-Dominion Centre Suite 3450, P.O. Box 328 Toronto, ON M5K 1K7
AND TO: RecordXpress 124 Cockford Blvd Scarborough, ON M1R 3C3
AND TO: Sax Finance B.V.Nuria Munoz/David Jaarsma/Lars Sorensen Beechavenue 54-80 1119 PW Schiphol-Rijk, The Netherlands
AND TO: SunGard Availability Services (Canada) 2010 Winston Park Drive Oakville, ON L6H 5R7
AND TO: Valzur Investments B.V. Mireille Nicole Kruijer/Bart BlokpoelAtrium, Strawinskylaan 3105, 7th Floor 1077 ZX Amsterdam, The Netherlands
TOR01: 6597009: v10
PART I - OVERVIEW
1. On February 16, 2016 (the "Winding-Up Date"), the Ontario Superior Court of Justice
(Commercial List) (the "Court"), upon the application of the Attorney General of Canada
granted an order (the "Winding-Up Order") pursuant to section 10.1 of the Winding-Up and
Restructuring Act R.S.C. 1985, C.W-11 (the "WURA"): (i) winding-up the business (the
"Business") in Canada of Maple Bank GmbH ("Maple Bank"); and (ii) appointing KPMG Inc.
(the "Liquidator") as the Liquidator of the Business and the assets (as defined in section 618 of
the Bank Act S.C. 1991, c. 46) of Maple Bank (the "Toronto Branch Assets").
2. Since the granting of the Winding-Up Order, a Claims Procedure (as defined below) has
been implemented in accordance with the a claims procedure order dated June 8, 2016 (the
"Claims Procedure Order"). In addition, on March 20, 2017 the Court authorized the
Liquidator to make a partial and interim distribution (the "First Interim Distribution") to the
German Insolvency Administrator (the "GIA") from the estimated surplus (the "Estimated
Surplus") as realized from the sale of the Business and Assets of the Toronto Branch of Maple
Bank (the "Toronto Branch"). Furthermore, on September 25, 2017, the Court authorized the
Liquidator to make a second partial and interim distribution (the "Second Interim
Distribution") to the GIA from the Estimated Surplus as realized from the sale of the Business
and Assets of the Toronto Branch.
3. This factum is filed in support of a motion by the Liquidator for an order, inter alia,
authorizing and directing the Liquidator to make a further interim distribution to the GIA of a
portion of the Estimated Surplus, in the amount of $5 million CAD and € 3,550,812.18 (the
"Third Interim Distribution") on or after December 19, 2017.
4. In addition, the Liquidator seeks an order for approval of an Order providing for the
production and transfer to the GIA of information and data in the possession of the Toronto
Branch and the Liquidator (the "Data Transfer Order").
5. In short, and as further elaborated below, several compelling factors support the granting
of an order for the Third Interim Distribution and the Data Transfer Order:
2
i) as set out in the Thirteenth Report of the Liquidator, and corresponding Confidential
Supplement, the requested Third Interim Distribution to the GIA is from the Estimated
Surplus, and the estimated reserves as established by the Liquidator (the "Estimated
Reserve") are adequate to cover all existing unresolved claims and any future potential
claims that may be made against the Toronto Branch;
ii) on account of the Estimated Reserve, the Third Interim Distribution will not prejudice
the interests of any of the creditors of the Toronto Branch, and all creditors of the
Toronto Branch would have been duly notified of the intended distribution through the
Notice of Distribution as published on December 8, 2017;
iii) the Third Interim Distribution will constitute a transfer to another insolvency
administrator (the GIA), for the benefit of the creditors of the German Estate, and in
furtherance of the policy objective of complementing and accommodating insolvency
proceedings in foreign jurisdictions in order to preserve and maximize value for the
benefit of all creditors of Maple Bank; and
iv) the Data Transfer Order is in aid of the activities of the GIA to fulfill its statutory or
other legal duties under German law including with respect to compliance and disclosure
obligations to tax authorities, banking authorities or German prosecutors, and
investigation of potentially improper conduct within Maple Bank and its various
affiliates. To the extent that personal information is implicated, and any expectation of
privacy exists in respect of same, it will be protected by (i) German privacy law, which
provides similar protections to those of the Personal Information Protection and
Electronic Documents Act, S.C. 2000, c. 5 ("PIPEDA"), and in some cases, more
stringent protections; and (ii) the non-public nature of the GIA proceedings.
6. KPMG accordingly requests that the Third Interim Distribution and Data Transfer Orders
be granted.
PART II - FACTS
7. The facts with respect to this Motion are briefly outlined herein. They are more fully set
out in the thirteenth report of the Liquidator dated December 8, 2017 (the "Thirteenth Report")
3
and the corresponding confidential supplement (the "Confidential Supplement"). Capitalized
terms used and not otherwise defined have the same meanings as set out in the Thirteenth
Report. Unless otherwise indicated, all references to monetary amounts herein are denominated
in Canadian dollars (CAD).
Background
8. Maple Bank is a Canadian-owned German bank, and an Authorized Foreign Bank in
Canada under section 2 and Part XII.1 of the Bank Act. In Germany, Maple Bank is subject to
regulation by the Federal Financial Supervisory Authority. As an Authorized Foreign Bank,
Maple Bank was regulated with respect to its business in Canada, as operated through the
Toronto Branch, by the Office of the Superintendent of Financial Institutions ("OSFI").
Thirteenth Report of the Liquidator dated December 8, 2017 (the "Thirteenth
Report"), para 1, Motion Record, Tab 2
9. In February of 2016 the emergence of, inter alia, significant German tax claims led to the
appointment of a German insolvency administrator (the "GIA") over Maple Bank. The
appointment of the GIA and Maple Bank's increasingly tenuous financial position in Germany
led OSFI to request that the Attorney General of Canada obtain the Winding-Up Order in respect
of the Business and the Toronto Branch Assets (the "Winding-up Proceedings").
Thirteenth Report, paras 2-4, Motion Record, Tab 2
10. Recognizing that despite Maple Bank's problems in Germany, the Toronto Branch likely
had a strong balance sheet, and that in all likelihood there would be a significant surplus
available to the GIA, the February 16, 2016 Winding-Up Order was crafted to ensure: (i)
cooperation with the GIA, including with respect to its stated objective of obtaining a
distribution as soon as practicable; while at the same time (ii) preserving important statutory
protections designed at first instance to ring fence the Toronto Branch Assets for the benefit of
the creditors of Toronto Branch.
Winding-up Order, Appendix "A" to the Thirteenth Report, Motion Record, Tab
2A
-4
1 1. In addition, paragraphs 8(a) and 9(a) of the Winding-Up Order expressly directed the
Liquidator to exercise its powers to provide the GIA with such information regarding the
Toronto Branch as reasonably required in order to permit the GIA to fulfill its statutory
obligations under German law. The Liquidator and GIA were ordered to consult and exchange
information in respect of the Assets and Business of Maple Bank in Canada.
Winding-up Order, Appendix "A" to the Thirteenth Report, Motion Record, Tab
2A
The Claims Procedure Order
12. On June 8, 2016, the Court issued a claims procedure order (the "Claims Procedure
Order"), with the aim of facilitating a timely determination of the existence and amount of any
Claims against the Toronto Branch. Under the Claims Procedure Order, creditors were requested
to prove their Claims against the Toronto Branch by delivering a completed Proof of Claim form
(and supporting documentation) to the Liquidator by September 19, 2016 (the "Claims
Submission Date").
Twelfth Report, paras 7, 18 Appendix "C" to the Thirteenth Report, Motion
Record, Tab 2C
13. In accordance with the Claims Procedure Order, by June 15, 2016, the Claims Procedure
Order had been posted on the Liquidator's website, a Claims package was mailed to every
known creditor of the Toronto Branch and notice of the Claims Procedure was published.
Twelfth Report, para 7, Appendix "C" to the Thirteenth Report, Motion Record,
Tab 2C
14. The Claims Procedure Order resulted in the Liquidator receiving 60 Proofs of Claim
totalling approximately $1.59 billion, including a Proof of Claim submitted by the GIA on behalf
of Maple Bank totaling $791.33 million (the "GIA Claim") as well as other operational funding
that was provided to the Toronto Branch by Maple Bank from Germany.
Thirteenth Report, para 35, Motion Record, Tab 2
-5
The Distribution Order
15. On November 25, 2016, the Court issued an order authorizing the Liquidator to make a
distribution to creditors of the Toronto Branch with proven claims under the Claims Procedure
(the "Distribution Order"). In accordance with the Distribution Order, on December 9, 2016
the Liquidator paid proven claims in the total value of approximately $686.8 million.
Twelfth Report, para 39, Appendix "C" to the Thirteenth Report, Motion Record,
Tab 2C
16. The Liquidator reached an agreement with the GIA with respect to the GIA Claim
whereby the GIA Claim, to the extent that it is valid, would be reduced to the extent of any
distribution made to the GIA. The GIA also agreed that such corresponding portion of the GIA
Claim would be extinguished and released by such distribution. In addition, the remaining
portion of the GIA Claim, to the extent that it is valid, after taking into account any interim
distribution, would be capped at an amount (which amount may from time to time increase or
decrease) that results in the Toronto Branch having assets in excess of its liabilities, so that
Creditors with Proven Claims would receive 100 per cent of their Claims plus interest in
accordance with the WURA.
Thirteenth Report, para 35, Motion Record, Tab 2
The Initial Interim Distribution Order
17. Following the filing of the Liquidator's Tenth Report, on January 27, 2017, the Court
issued the Principal Officers Additional Claims Order (the "Principal Officers Additional
Claims Order") setting February 28, 2017 as the claims bar date (the "Principal Officers
Claims Bar Date"), and also issued a Representative Counsel Order for counsel to represent
Non-Executive Employees of the Toronto Branch.
Principal Officers Additional Claims Order, Appendix "B" to the Thirteenth
Report, Motion Record, Tab 2B
18. The Principal Officers Claims Bar Date has expired, and no claims have been received by
the Liquidator in accordance with the Principal Officers Additional Claims Order.
Thirteenth Report, para 78, Motion Record, Tab 2
6
19. On March 10, 2017, the Liquidator filed its Eleventh Report pursuant to which the
Liquidator: (i) provided an updated statement of receipts and disbursements for the period ending
February 28, 2017; (ii) provided an update on the Claims Procedure; (iii) reported on the
Estimated Surplus available for distribution to GIA; (iv) requested that the Court approve the
First Interim Distribution to the GIA; and, (v) requested that the Court approve the notice of
distribution as published on March 3, 2017.
Thirteenth Report, para 17, Motion Record, Tab 2
20. On March 20, 2017, the Court granted an Order which, inter alia, authorized the
Liquidator to make a First Interim Distribution in the amount of up to $660.6 million to the GIA
from the Estimated Surplus (the "First Interim Distribution Order").
Thirteenth Report, para 39, Exhibit "C" to the Thirteenth Report, Motion Record,
Tab 2
21. In accordance with the First Interim Distribution Order, on March 14, 2017 the
Liquidator paid approximately $658 million to the GIA.
Thirteenth Report, para 40, Exhibit "C" to the Thirteenth Report„ Motion Record,
Tab 2
The Second Interim Distribution Order
22. On September 25, 2017, the Liquidator filed its Twelfth Report pursuant to which the
Liquidator: (i) provided an updated statement of receipts and disbursements for the period ending
August 31, 2017; (ii) provided an update on the Claims Procedure; (iii) reported on the
Estimated Surplus available for distribution to GIA; (iv) requested that the Court approve the
settlement of the claim of Radius Financial Inc. (the "Radius Settlement") and the settlement of
the claim of Global One Financial Inc. (the "Global One Settlement"); (v) requested that the
Court approve the Second Interim Distribution to the GIA; and, (vi) requested that the Court
approve the notice of distribution as published on September 15, 2017.
Twelfth Report, Appendix "C" to the Thirteenth Report, Motion Record, Tab 2C
7
23. On September 26, 2017, the Court granted an Order which, inter alia, authorized the
Liquidator to make a Second Interim Distribution in the amount of $91.4 million to the GIA
from the Estimated Surplus (the "Second Interim Distribution Order").
Second Interim Distribution Order, Appendix "D" to the Thirteenth Report, Motion
Record, Tab 2D
Thirteenth Report and Requested Interim Distribution
24. To date, the Liquidator has disbursed approximately $1.46 billion from the proceeds of
the Toronto Branch liquidation to satisfy the proven Claims of all but one creditor.
Thirteenth Report, para 34, Motion Record, Tab 2
25. Further to the Executives Disputed Claims Amounts, as defined and described in the
Twelfth Report, the Liquidator executed minutes of settlement with each of the Executives in
late October 2017. The contents of the settlement agreements, and aggregate value of same, are
set out in the Confidential Settlement. The settlements are not conditional on the approval of the
Court, yet the Liquidator is seeking approval of its activities in settling the Executives Disputed
Claims Amounts.
Thirteenth Report, paras 37-43, Motion Record, Tab 2
26. The remaining unresolved Claim consists of that advanced by Canada Revenue Agency
(the "CRA"), amounting to approximately $11.9 million. In addition, the Liquidator is holding
$8 million related to potential corporate income tax owing to CRA associated with tax returns
filed by the Liquidator covering the period October 1, 2015 to February 15, 2016 and post
Winding-up date (the "Potential CRA Remittance and Liability").
Thirteenth Report, paras 44, 45, Motion Record, Tab 2
27. Consequently, the total Unresolved Claim and Potential CRA Remittance and Liability
total approximately $19.9 million. The Liquidator has established an appropriate reserve in the
amount of $44.8 million (the "Estimated Reserve") to provide for, inter alia, the Unresolved
Claim and possible future claims (the "Future Potential Claims").
Thirteenth Report, para 72, Motion Record, Tab 2
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28. As at October 31, 2017, the Toronto Branch held approximately $49.9 million in cash
and cash equivalents, which total excludes a contract settlement with Credit Suisse, which
resulted in a payment of € 3,550,812.18 to Maple Bank (the "Credit Suisse Settlement
Amount"). The GIA is in possession of the Credit Suite Settlement Amount, which can be
distributed to the GIA without affecting the Estimated Reserve.
Thirteenth Report, paras 72, 75, Motion Record, Tab 2
29. The realization process for all of the Assets of the Toronto Branch is complete, with the
only remaining anticipated realization consisting of interest income on invested funds.
Thirteenth Report, para 48, Motion Record, Tab 2
30. The Liquidator recommends in the Thirteenth Report that the Court approve the Third
Interim Distribution on the basis, inter alia, that: (i) the Asset realization process is complete and
the Liquidator is currently holding cash or equivalents in excess of $49.9 million (ii) the
Estimated Reserve of $44.8 million is adequate to cover the existing Unresolved Claim and any
Future Potential Claims to July 31, 2018, and (iii) a portion of the Estimated Surplus available
for distribution to the GIA is approximately $5 million.
Thirteenth Report, para 46, Motion Record, Tab 2
31. The Thirteenth Report also describes, and seeks the Court's approval of the transfer and
sharing of certain Toronto Branch and Maple Bank affiliate information and data by the
Liquidator to the GIA. This is set out in greater detail below.
Thirteenth Report, para 46, Motion Record, Tab 2
32. On December 8, 2017 the Liquidator posted a Notice of Distribution notifying any
creditors of the Toronto Branch of the Third Interim Distribution in the national edition of The
Globe and Mail and international edition of The Financial Times.
Notice of Distribution to Creditors, Appendix "E" to the Thirteenth Report, Motion
Record, Tab 2E
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The Interests of Toronto Branch Creditors and the GIA
33. As a consequence of the Estimated Reserve, the Third Interim Distribution will not
prejudice the interests of any creditors of the Toronto Branch.
Thirteenth Report, para 78, Motion Record, Tab 2
34. In light of the GIA's stated objective of making a distribution to creditors of Maple Bank
in Germany as soon as practicable, the Liquidator worked with the GIA in order to implement a
distribution process in Canada that will ensure that appropriate Reserves will be maintained by
the Liquidator in order to pay, in full, the Proven Claims of creditors of the Toronto Branch,
while facilitating a prompt distribution to the GIA of the available funds remaining after the
establishment of the Estimated Reserve. To this end, the Liquidator, in consultation with the
GIA, has developed the proposed Third Interim Distribution.
Thirteenth Report, para 78, Motion Record, Tab 2
35. The Third Interim Distribution will be, in essence, a transfer to another insolvency
administrator for the benefit of the creditors of the German Estate.
Thirteenth Report, para 78, Motion Record, Tab 2
36. Moreover, the Third Interim Distribution will permit the creditors of the German Estate
to receive a distribution in a timely manner, and be afforded a treatment more consistent with
that received by creditors of the Toronto Branch.
Thirteenth Report, para 78, Motion Record, Tab 2
37. A timely interim distribution will also eliminate, as soon as practicable, the exchange rate
risk between the Canadian dollar and the Euro, given that the GIA will have to distribute such
funds from the Third Interim Distribution to Maple Bank creditors in Euros.
Twelfth Report of the Liquidator dated September 19, 2017, para 116, Appendix
"C" to the Thirteenth Report Motion Record, Tab 2C
38. The GIA and the Liquidator have sought to reconcile and mitigate the operational and
practical aspects of any conflicts that may exist between the respective Winding-up proceedings
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of the Toronto branch and the German insolvency proceedings; this is exemplified by the request
by the Liquidator that the Court approve the Third Interim Distribution.
Thirteenth Report, para 78, Motion Record, Tab 2
39. The GIA, pursuant to the applicable German statute, represents the participants in the
German insolvency proceeding, and in particular those creditors that were not able to participate
in the Canadian Winding-Up Proceeding. Since all creditors in the Canadian Winding-Up
Proceeding have or will receive payment of their Proven Claims, in full with interest, it is
important that the creditors in the German insolvency proceeding not be unreasonably and
unnecessarily prejudiced in receiving a partial recovery of their proven claims.
Thirteenth Report, para 78, Motion Record, Tab 2
The Data Transfer Order
40. The GIA has requested that the Liquidator provide it with a copy of all Toronto Branch
record, documents, emails, and other data (the "Data") which is in the power, possession or
control of the Liquidator, including all data related to Maple Bank and its Affiliates (as defined
in the Thirteenth Report) that is stored at four Canadian storage facilities or held on computer
tapes in the possession of KPMG or Ernst & Young. The GIA will subsequently transfer this
Data from Canada to Germany.
Thirteenth Report, para 46, Motion Record, Tab 2
Affidavit of Charlotte Schildt, sworn December 7, 2017 (the "Schildt Affidavit") at
para 8, Motion Record, Tab 3
41. The basis of the GIA's request, as understood by the Liquidator, is to allow the GIA to
fulfill its statutory or other legal duties under German law including with respect to a) the
collection, safeguarding and assessment of information of the insolvent parties; b) satisfaction of
tax filings, annual returns and other compliance and disclosure obligations to tax authorities,
banking authorities or German prosecutors; c) investigation of potentially improper conduct
within Maple Bank and Affiliates with respect to liability, damage, claw back and repayment
claims, and d) obligations to cooperate with, and respond to, the tax authorities and German
prosecutors with respect to their investigations. The Liquidator has also been advised by the
GIA that a criminal and tax investigation has been commenced in Germany in relation to former
directors, supervisory board members, officers and former employees of Maple Bank involving
allegations of serious tax evasion and money-laundering.
Thirteenth Report, para 47, Motion Record, Tab 2
Schildt Affidavit, paras 3-8, Motion Record, Tab 3
42. Following the closure of the Toronto Branch's office effective December 31, 2016, the
Liquidator made arrangements to ship physical records located at the office to a third party
operated record storage facility located in Scarborough that had previous been used by the
Toronto Branch (the "RecordXpress Facility") and, when that facility became full, to a third
party operated record storage facility in the Greater Toronto Area (the "Recall Facility"). In the
case of digital records, the Liquidator made arrangements with Maple Securities Canada Limited
("MSCL") to have access to the Toronto Branch's records that had been backed up on a server
located at an offsite disaster recovery center located in Mississauga, Ontario and operated by
SunGard (the "SunGard Facility"). The arrangement to have a daily back up performed by
MSCL of the Toronto Branch's records was in place prior to the Winding Up Date. The
Liquidator also arranged, in conjunction with MSCL, to have a copy made of the data stored on
the servers located at the Toronto Branch's office as at the time of office's closure, which
computer tape is stored at Ernst & Young's downtown Toronto office (the "EY Facility").
Finally, in addition to the above, the Toronto Branch's records also include certain physical
records stored at a third party storage facility in Brampton (the "Iron Mountain Facility") and a
copy of data stored on the servers located at the Toronto Branch's office as at the Winding Up
Date, which computer tape is stored at KPMG's Toronto office (the "KPMG Facility").
Thirteenth Report, para 48, Motion Record, Tab 2
Schildt Affidavit, paras 9-11, Motion Record, Tab 3
43. In evaluating the GIA's request for a copy of the books and records of the Toronto
Branch, the Liquidator has identified the following issues:
i) The Toronto Branch is not a separate legal entity but rather a branch of Maple Bank;
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ii) The Toronto Branch's records are comingled with those of Maple Bank and its various
Affiliates, and it is not practical, and likely not possible, to segregate, by legal entity the
digital records maintained on the SunGard Server, or the computer tapes located at the
EY Facility and the KPMG Facility. The Maple Bank Group had a common IT system,
with many of the significant business functions using common software and databases.
In addition, the volume of digital data involved is enormous. In the case of physical
records stored at the various facilities, the cost of segregating the records would be
prohibitive, given the volume of records involved;
iii) The Toronto Branch's records contain personnel information of both former
employees and mortgagors and immigrant investors whose mortgages / loans were either
securitized through the NHA MBS program (under which the Toronto Branch was an
Approved Issuer) or indirectly financed by the Toronto Branch; and
iv) The Data received by the GIA will be transferred to Germany.
Thirteenth Report, para 50, Motion Record, Tab 2
44. The Toronto Branch's records contain personal information associated with its former
employees, though this data is thought to be a small portion of the total. The personal data is of
two types; that related to the Toronto Branch, such as employee personnel files and payroll
information, and that associated with the employee's personal life.
Thirteenth Report, para 54, Motion Record, Tab 2
45. The Toronto Branch had a Computer Network Internet Usage Policy, and Email Policy
(collectively the "Policies") which, as described in greater detail in the Thirteenth Report,
expressly indicated that employees would possess no expectation of privacy in subject
information, content and files. The Policies were made available to employees and posted on the
company website, but no formal consent to the Policies was obtained.
Appendixes "G" and "H" to the Thirteenth Report, para 55, Motion Record, Tab
2G and 2H
46. The Toronto Branch's records contain personal information associated with
approximately 13,500 individual mortgagors. This includes proof of income, banking details,
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and payment history of mortgagors. The mortgages were originated by third parties,
subsequently purchased by the Toronto Branch and, with only a few exceptions, thereafter
securitized through the NHA MBS program (as the Toronto Branch was an Approved Issuer).
Thirteenth Report, para 57, Motion Record, Tab 2
47. The records of the Toronto Branch also contain the personal information associated with
approximately 440 borrowers under the Immigrant Investor Program ("IIP"). A number of
financial institutions are in the business of providing loans (each an "Immigrant Investor
Loan") to immigrant investors. The Toronto Branch in turn provided financing to such financial
institutions that provided loans to borrowers to invest with Citizenship and Immigration Canada
("CIC") or IQ Immigrants Investissuers Inc. ("IQII"). As part of these financings, the Toronto
Branch obtained copies of the loan applications associated with each Immigrant Investor Loan,
which applications contain personal information (e.g. banking information) of the borrower.
Thirteenth Report, para 59, Motion Record, Tab 2
48. In the event the Data Transfer Order is granted, the Liquidator anticipates taking the
following steps to transfer the Toronto Branch Data:
i) Assigning to the GIA the storage contract associated with the Recall Facility, and
providing to the GIA all the physical records located at the facility. These records will
include Data of the Toronto Branch, and data of Maple Bank and Affiliates;
ii) Authorizing MSCL to create a copy of the Data stored on the SunGard Server and
providing a copy to the GIA. This copy will include Data of the Toronto Branch, and
data of Maple Bank and Affiliates;
iii) Authorizing MSCL to provide to the GIA all of the physical records located at the
RecordXpress Facility and the Iron Mountain Facility. This will include Data of the
Toronto Branch, and data of Maple Bank and Affiliates;
iv) Assigning to the GIA any rights the Toronto Branch has to access the Data; and
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v) To the extent technically feasible, providing to the GIA a copy of the computer tape
located at the KPMG Facility. This copy will include Data of the Toronto Branch, and
data of Maple Bank and Affiliates;
Thirteenth Report, para 65, Motion Record, Tab 2
49. It is also understood by the Liquidator that MSCL will take steps to assign to the GIA the
storage contracts associated with the RecordExpress, Iron Mountain, and SunGard Facilities, and
to assign any software and technical equipment required to access the SunGard server and the
tape at the E&Y Facility.
Thirteenth Report, para 65, Motion Record, Tab 2
50. On December 7, 2017 the Liquidator served its notice of motion, followed by the
Thirteenth Report and the affidavit Charlotte Schildt in support of the requested Third Interim
Distribution Order and Data Transfer Order.
PART III - ISSUES
51. The issues to be determined by the Court on this motion are whether it is appropriate for
the Court to (i) approve the Third Interim Distribution, (ii) grant the Data Transfer Order, and (ii)
grant a Sealing Order over the Confidential Supplement.
PART IV - LAW
52. The underlying purpose of the WURA is to provide a mechanism for (i) the orderly
gathering of and realization on the assets of a debtor as inexpensively and expeditiously as
possible, together with (ii) the corresponding distribution of the proceeds thereof by the
Liquidator under the supervision of the Court.
Cooperants, Mutual Life Insurance Society (Liquidator of) v. Dubois, [1996] 1 S.C.R.
900, 1996 CarswellQue 369 at paras 36-37, Liquidator Brief of Authorities (the
"BOA"), Tab 1
Re Maple Bank GmbH, 2017 ONSC 2536 (Commercial List), 2017 CarswellOnt 6220
("Maple Bank") at para 24, BOA Tab 2
-15-
53. Sections 75 and 77 of the WURA provide a skeletal framework for the distribution in full
or in part of the assets of a debtor by the Liquidator to the debtor's creditors.
Sections 75-77 of the Winding-up and Restructuring Act, R.S.C., 1985, c.W-11
Maple Bank supra, at para 25, BOA Tab 2
54. It is not a precondition to a distribution to creditors of a debtor under the WURA that: (i)
all claims filed in the WURA proceeding at the date of the intended distribution be allowed or
disallowed by the Liquidator; nor (ii) that there be complete certainty that all potential creditors
have submitted proofs of claim at the date of the intended distribution. Consequently, there is
authority for the granting of interim distributions in the context of WURA proceedings.
Maple Bank supra, at paras 26, 27, BOA Tab 2
Canada (Attorney General) v. Confederation Life Insurance Co., 2002 CarswellOnt
3681 (S.C.J.) (Commercial List) at para 4, BOA Tab 3
55. Moreover, while Section 158.1(2) of WURA provides for a distribution scheme pursuant
to which an Authorized Foreign Bank in liquidation in Canada may, with the approval of the
Court, receive the winding-up surplus after all creditors with proven claims have received the
full value of their proven claims and Statutory Interest (the "Priority Amounts"), the statutory
provision does not act as a bar to an interim distribution. Section 158.1(2) is set out below:
Distribution of Property
158.1 (1) Where a winding-up order is made in respect of an authorized foreign
bank, claims shall be paid in the following order of priority:
(a) charges, costs and expenses, including the remuneration of the liquidator,
incurred in the winding-up of the business in Canada of the authorized foreign
bank and of the liquidation of its assets;
(b) claims of preferred creditors, specified in section 72; and
(c) debts and liabilities of the authorized foreign bank in respect of its business in
Canada in order of priority as set out in sections 625 and 627 of the Bank Act.
Distribution and release of surplus assets
(2) Any assets that remain after payment of the claims referred to in paragraphs
(1)(a) to (c) are to be applied firstly in payment of interest from the
commencement of the winding-up at the rate of five per cent per annum on all
- 16 -
claims proved in the winding-up and according to their priority. The liquidator
may, with the approval of the court, release to the authorized foreign bank any
assets remaining after payment of the interest.
Section 158.1 of the Winding-up and Restructuring Act, R.S.C., 1985, c.W-11
56. The purpose of section 158.1(2) is to ensure that an Authorized Foreign Bank will only
be entitled to a distribution where there are sufficient funds in the Canadian estate to satisfy the
Priority Amounts. Section 158.1 is not a bar to an interim distribution of surplus to an
Authorized Foreign Bank where sufficient reserves are established to ensure that all Priority
Amounts will be paid in due course.
Maple Bank, supra, at paras 29, 31, 37, 38, BOA Tab 2
57. The guiding factors set out in the April 27, 2017 Endorsement of Regional Senior
Justice Morawetz released in support of the granting of the First Interim Distribution are of
equal, if not heightened relevance, to the present motion for approval of the Third Interim
Distribution. As set out below, each factor favours the approval of Third Interim Distribution
sought by the Liquidator on this motion.
A) No Prejudice to the Toronto Branch creditors
58. Central to the granting of the First Interim Distribution was the finding that, by virtue of
the Estimated Reserve maintained by the Liquidator, the creditors of the Toronto Branch would
not suffer prejudice:
I am satisfied that the Interim Distribution is appropriate in the context of these
proceedings. I am satisfied that no creditors of the Toronto Branch will suffer prejudice
as a result of the Interim Distribution, as the Toronto Branch has a significant surplus and
the Liquidator has calculated that it will be able to maintain adequate reserves which will
ultimately pay all Proven Claims and Future Potential Claims.
Maple Bank supra, at paras 34, 37, BOA Tab 2
59. As outlined in the Thirteenth Report, the total Unresolved Claims, and the Potential CRA
Remittance and Liability, total approximately $19.9 million. The Liquidator has established, in
consultation with the GIA, an appropriate and conservative Estimated Reserve in the amount of
$44.8 million to provide for, inter alia, the Unresolved Claim and Future Potential Claims.
- 17 -
Thirteenth Report, paras 68, 69, Motion Record, Tab 2
60. The Liquidator can now predict with certainty the universe of Claims that may be made
against the Toronto Branch, including in respect of contingent claims currently filed and not
proven. The passing of the Principal Officers Claims Bar Date without the Liquidator having
received any Claims filed against the Principal Officers of the Toronto Branch also provides
further certainty with respect to the quantum of any potential indemnity claims that the Principal
Officers may have against the Toronto Branch.
Thirteenth Report, paras 78, Motion Record, Tab 2
61. As at October 31, 2017 the Toronto Branch held approximately $49.9 million in cash and
cash equivalents. The realization process for all of the Assets of the Toronto Branch is complete,
with the only remaining anticipated realization consisting of interest income on invested funds.
In light of the maintained Estimated Reserve, the Estimated Surplus at the present time is
approximately $5.1 million.
Thirteenth Report, paras 72, 78, Motion Record, Tab 2
62. It is on the basis of the above salient facts that the Liquidator recommends in the
Thirteenth Report that the Court approve the Third Interim Distribution. The Estimated Reserve
(in the amount of $44.8 million) is adequate to cover the existing Unresolved Claim and any
Future Potential Claims to July 31, 2018, and the Estimated Surplus is accordingly available for
distribution to the GIA.
Thirteenth Report, para 72, Motion Record, Tab 2
63. Sufficient notice has also been provided to any Toronto Branch creditors. On December
8, 2017 the Liquidator posted a Notice of Distribution notifying creditors of the Third Interim
Distribution in the national edition of The Globe and Mail and international edition of The
Financial Times.
Notice of Distribution to Creditors, Appendix "E" to the Thirteenth Report, Motion
Record, Tab 2E
- 18 -
64. Consequently, and in keeping with the approach, as endorsed by granting of the First
Interim Distribution Order, the proposed Third Interim Distribution will not be prejudicial to the
remaining creditors of the Toronto Branch.
B) An Interim Distribution to the GIA is Equitable
65. Where the Court is satisfied that adequate reserves are posted, and no prejudice would
result from an interim distribution, no principled basis exists to delay distribution of the surplus.
The following comments in the April 27, 2017 Reasons are apt:
In these circumstances, there is no principled basis on which to delay the distribution of
the surplus to the GIA, until such time as the Liquidator resolves all outstanding claims
against the Toronto Branch. Indeed, it would be inequitable to delay the distribution.
Maple Bank, supra, at para 35, BOA Tab 2
66. As noted above, the Third Interim Distribution will not lead to any prejudice to the
Toronto Branch's creditors. The failure to approve the distribution, however, would continue to
expose creditors in Germany to delay and to considerable foreign exchange risks on the amounts
that would eventually be distributed to them.
Thirteenth Report, para 78, Motion Record, Tab 2
67. The Third Interim Distribution will be, in essence, a transfer to another insolvency
administrator for the benefit of the creditors of the German Estate.
Thirteenth Report, para 78, Motion Record, Tab 2
68. In the context of cross border insolvency proceedings the Court has also recognized, as a
matter of policy, that where possible Canadian Courts should complement, coordinate and
accommodate insolvency proceedings in foreign jurisdictions in order to preserve and maximize
value for the benefit of all creditors.
Re United Air Lines Inc., 2003 CarswellOnt 2786 (S.C.J.) (Commercial List) at para
1, BOA, Tab 4
Re Matlack Inc., 2001 CarswellOnt 1830 (S.C.J.) (Commercial List) at para 3, BOA,
Tab 5
-19-
69. This approach is also consistent with the Court's previous interpretation of the cross-
border provisions of insolvency legislation as promoting co-operation with foreign jurisdictions
in cases of cross-border insolvencies. This statutory recognition follows the principles of
international comity in respect of foreign insolvency proceedings.
Re MtGox Co., 2014 ONSC 5811 (Commercial List), 2014 CarswellOnt 13871 at
paras 10-12, BOA, Tab 6
70. In light of the GIA's stated objective of making a distribution to creditors of Maple Bank
in Germany as soon as practicable, the Liquidator worked with the GIA in order to implement a
distribution process in Canada that will ensure that appropriate reserves will be maintained by
the Liquidator, while facilitating a prompt distribution to the GIA of the available funds
remaining after the establishment of the Estimated Reserve.
Thirteenth Report, para 78, Motion Record, Tab 2
71. The GIA represents the participants in the German insolvency proceeding, and in
particular those creditors that were not able to participate in the Canadian Winding-Up
Proceeding. Since all creditors in the Canadian Winding-Up Proceeding have or will receive
payment of their Proven Claims, in full with interest, it is important that the creditors in the
German insolvency proceeding not be unreasonably and unnecessarily prejudiced in receiving a
partial recovery of their proven claims.
Twelfth Report of the Liquidator dated September 19, 2017, para 115, Appendix
"C" to the Thirteenth Report Motion Record, Tab 2C
72. Lastly, the Court possesses broad authority to make orders that deal with entities in
insolvency proceedings even where there is a lack of permissive statutory language, and have all
of the powers that are necessary to do justice between the parties. Except where expressly to the
contrary, the Court's jurisdiction is unrestricted in substantive law in civil matters.
Maple Bank supra, at para 36, BOA Tab 2
73. The Third Interim Distribution is appropriate in the context of these proceedings because
(i) no creditors of the Toronto Branch will suffer prejudice as a result of the Third Interim
Distribution, as the Toronto Branch has a significant surplus and the Liquidator has calculated
- 20 -
that it will be able to maintain adequate reserves, and (ii) the Third Interim Distribution is in
accordance with the recognized stated objective of the Courts in Canada to, where possible,
assist with and accommodate insolvency proceedings in a foreign jurisdiction, in order to
maximize value for the benefit of all affected creditors.
C) The Confidential Supplement Contains Commercially Sensitive Confidential
Information
74. The Executives minutes of settlement are attached as appendices to the Confidential
Supplement to the Thirteenth Report (the "Confidential Appendices"). The Confidential
Supplement summarizes the Confidential Appendices.
75. The Confidential Appendices contain express confidentiality protections in order to
protect the personal financial information of the Executives. Importantly, the Confidential
Supplement also contains sensitive information, including the terms of settlement, and the
consideration received by each of the Executives.
Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, 2002
CarswellNat 822 ("Sierra Club") at paras 53, 54, BOA, Tab 7
Section 137(2), Courts of Justice Act, R.S.O. 1990, C.43
Thirteenth Report, para 40, Motion Record, Tab 2
76. A sealing order is necessary to prevent a serious risk to the important commercial
interests of the settlement parties, and reasonable alternative measures will not prevent that risk.
Sierra Club supra, at paras 53, 54, BOA, Tab 7
77. The salutary effects of the requested sealing order outweigh any deleterious effects, such
as an impingement on public access to court proceedings, as the sensitive confidential
information contained in the Confidential Supplement, including the Confidential Appendices, is
ancillary to the issues before the Court relating to the request made by the Liquidator that its
activities be approved with regard to the settlement that it has entered into with the Executives.
Sierra Club supra, at paras 53, 54, BOA, Tab 7
- 21 -
D) The Data Transfer Order is Necessary and Appropriate
78. PIPEDA sets out rules for how private-sector federally regulated entities and businesses
collect, use and disclose personal information. In general, personal information may not be
collected, used or disclosed without the knowledge and consent of the individual. The Liquidator
is appointed under WURA with respect to the Toronto Branch, an authorized foreign bank,
accordingly the Liquidator is subject to the applicable provisions of PIPEDA.
Office of the Privacy Commissioner ("OPC") PIPEDA Case Summary #2006-336,
BOA, Tab 8
Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5
("PIPEDA")
79. Personal information is broadly defined under PIPEDA to constitute information about an
"identifiable individual." As a limited exception, information that employees have created at
work such as emails or analysis may constitute "work product", and be collected, used or
disclosed absent individual consent. Whether such information may be deemed work product
will depend on contextual factors, such as how and why the information was produced, how it
was used, and industry practices (the "Work Product Exception").
Sections 7(1)(b.2), (2)(b.2) and (3)(e.2), PIPEDA
80. PIPEDA authorizes organizations to disclose personal information absent individual
consent under certain circumstances detailed in section 7(3). To the extent that the Data
contains, in part, personal information that is not otherwise caught by the Work Product
Exception, the Liquidator relies on section 7(3) (the "Government Exception"). In short, this
exception to the consent requirement is directed at disclosure to government institutions to, inter
alia, enforce a law or aid in carrying out an investigation. The relevant provisions of PIPEDA are
set out below:
Disclosure without knowledge or consent
7.(3) For the purpose of clause 4.3 of Schedule 1, and despite the note that accompanies
that clause, an organization may disclose personal information without the knowledge or
consent of the individual only if the disclosure is
- 22 -
(c.1) made to a government institution or part of a government institution that has made a
request for the information, identified its lawful authority to obtain the information and
indicated that
(ii) the disclosure is requested for the purpose of enforcing any law of Canada, a
province or a foreign jurisdiction, carrying out an investigation relating to the
enforcement of any such law or gathering intelligence for the purpose of
enforcing any such law
Section 7(3)(c.1), PIPEDA
81. The term "government institution" is not defined in PIPEDA, yet the above provision
expressly references disclosure in aid of enforcement, and investigation, in a foreign jurisdiction.
The Office of the Privacy Commissioner ("OPC") has articulated the view that a company
holding information in Canada pertaining to Canadian residents is not required to provide
information to a foreign government in response to a court order issued abroad. Former Toronto
Branch employees would accordingly lose this protection on the transfer of Data to Germany. As
elaborated upon below, however, it is submitted that a Canadian Court may validly issue an
Order providing for the disclosure and transfer of information in aid of an enforcement or
investigation proceeding of a foreign government institution.
OPC, Privacy Commissioner's 2004 Animal Report on the Personal Information
Protection and Electronic Documents Act (October 6, 2005), at p 16, BOA Tab 9
Thirteenth Report, at para 61, Motion Record, Tab 2
82. Recent decisions of the OPC have confirmed that individuals should be notified if their
personal information will be transferred to and/or stored in a foreign country, and that such
information will be subject to foreign laws and potentially disclosed to foreign authorities.
OPC PIPEDA Case Summary #2008-394, BOA Tab 10
OPC PIPEDA Case Summary #2006-365, BOA Tab 11
OPC PIPEDA Case Summary #2006-313, BOA Tab 12
83. As more fully described in the chart attached as Appendix "I" to the Thirteenth Report,
protections under German law for personal information, including requests for information from
government authorities, are comparable to that provided by PIPEDA. In fact, in several areas
German law is more stringent, such as (i) the application of privacy law to non-commercial
- 23 -
activities, (ii) narrower employee, Work Product, and Government exceptions to the consent
requirement, and (iii) more rigorous cross-border transfer and breach notification requirements.
Appendix "I" to the Thirteenth Report, at para 61, Motion Record, Tab 2
84. Section 7(3)(c) permits disclosure absent individual knowledge or consent in order to
comply with an Order made by a Court to compel the production of information. By way of
example, the Winding-up Order itself provided for the disclosure of personal information per
section 7(3)(c) of PIPEDA to prospective purchasers and bidders for the sale of certain Assets of
the Toronto Branch.
Section 7(3)(c), PIPEDA
85. The Data Transfer Order follows as a corollary from paragraphs 8(a) and 9(a) of the
Winding-Up Order, which expressly directed the Liquidator to exercise its powers to provide the
GIA with such information regarding the Toronto Branch as reasonably required in order to
permit the GIA to fulfill its statutory obligations under German law. The Liquidator and GIA
were ordered to consult and exchange information in respect of the Assets and Business of
Maple Bank in Canada.
Winding-up Order, Appendix "A" to the Thirteenth Report, Motion Record, Tab
2A
86. It is submitted that the requested Data Transfer Order is justified, in light of the following
considerations:
i) it is believed that a large majority of the Data consists of work-related emails and
documents, and thus would be deemed work product;
Schildt Affidavit, at para 18, Motion Record, Tab 3
Thirteenth Report, at para 55, Motion Record, Tab 2
ii) by virtue of the Policies, employees possessed a diminished, if any, expectation of
privacy with respect to their Data;
Schildt Affidavit, at para 18, Motion Record, Tab 3
- 24 -
iii) current and former employees have been provided notice of the relief requested on the
present motion, as they had not previously provided written consent to the proposed
transfer of Data to a foreign jurisdiction;
Thirteenth Report, at paras 55-60, 78, Motion Record, Tab 2
iv) the requested Data Transfer Order is in aid of the activities of the GIA to fulfill its
statutory or other legal duties under German law including with respect to compliance
and disclosure obligations to tax authorities, banking authorities or German prosecutors,
and investigation of potentially improper conduct within Maple Bank and its Affiliates;
Schildt Affidavit, at para 8, Motion Record, Tab 3
Thirteenth Report, at para 47, Motion Record, Tab 2
v) to the extent that personal information is implicated, and any expectation of privacy
exists in respect of same, it will be adequately protected by German privacy law which
provides a similar, and in some cases more stringent, level of protection to PIPEDA, as
well as the non-public nature of the GIA proceedings, as more fully described in the
Schildt Affidavit and chart appended to the Thirteenth Report;
Schildt Affidavit, at paras 21-24, Motion Record, Tab 3
Thirteenth Report, at para 61, Motion Record, Tab 2
vi) a case-by-case review and any segregation or allocation, with respect to the Toronto
Branch or other Maple Bank entities, would be prohibitively expensive and time
consuming, and likely impossible in practice;
Schildt Affidavit, at paras 25-30, Motion Record, Tab 3
- 25 -
vii) the Liquidator has not provided notice to the mortgagors or borrowers for whom the
Toronto Branch possesses personal information, due to the fact that this will create
confusion as a result of their lack of knowledge of the involvement of the Toronto Branch
with the mortgages and financial instruments. While the Data may contain customer
information related to the mortgage loans and immigrant investor loans, such Data is not
central to the GIA request and if it can be efficiently excluded from the Data Sharing
Order, the GIA will not object to such exclusion;
Schildt Affidavit, at paras 19, 20, Motion Record, Tab 3
Thirteenth Report, at paras 57-60, Motion Record, Tab 2
84. Accordingly, the granting of the Data Transfer Order will accord with the terms of the
Winding-Up Order, privacy law protections, and principles of comity for the proper
administration of the Maple Bank estate.
Schildt Affidavit, at paras 12, 13, Motion Record, Tab 3
Thirteenth Report, at paras 46, 47, 61, Motion Record, Tab 2
PARV V - RELIEF
87. For the reasons set out above, the Liquidator requests that the Court grant the relief
requested in the Third Interim Distribution Order and the Data Transfer Order substantially in the
form of the draft Orders attached as Schedules "A" and "B" respectively to the Notice of Motion.
ALL OF WHICH IS RESPECTFULLY SUBMITTED this 12th day of December 2017
Alex M ne i evan Brooksbank
Lawyers for KPMG Inc., in its capacity as
Liquidator of the business in Canada of Maple
Bank GmbH
SCHEDULE "A"
1. Cooperants, Mutual Life Insurance Society (Liquidator of) v. Dubois, [1996] 1 S.C.R.
900, 1996 CarswellQue 369
2. Re Maple Bank GmbH, 2017 ONSC 2536 (Commercial List), 2017 CarswellOnt 6220
3. Canada (Attorney General) v. Confederation Life Insurance Co., 2002 CarswellOnt 3681
(S.C.J.) (Commercial List)
4. Re United Air Lines Inc., 2003 CarswellOnt 2786 (S.C.J.) (Commercial List)
5. Re Matlack Inc., 2001 CarswellOnt 1830 (S.C.J.) (Commercial List)
7. Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, 2002 CarswellNat
822
8. Office of the Privacy Commissioner ("OPC") PIPEDA Case Summary #2006-336
9. OPC, Privacy Commissioner's 2004 Annual Report on the Personal Information
Protection and Electronic Documents Act (October 6, 2005)
10. OPC PIPEDA Case Summary #2008-394
1 1. OPC PIPEDA Case Summary #2006-365
12. OPC PIPEDA Case Summary #2006-313
SCHEDULE "B"
Winding-up and Restructuring Act, R.S.C. 1985, c W-11
Creditors required to prove claims
75 (1) The liquidator may give notice in writing to creditors who have sent in their claims to him
or of whose claims he has notice, and to creditors whose claims he considers should not be
allowed without proof, requiring them to attend before the court on a day to be named in the
notice and prove their claims to the satisfaction of the court.
Disallowance on default
(2) Where a creditor does not attend in pursuance of the notice given under subsection (1), his
claim shall be disallowed, unless the court sees fit to grant further time for the proof thereof.
Disallowance on hearing
(3) Where a creditor attends in pursuance of the notice given under subsection (1), the court may
on hearing the matter allow or disallow the claim of that creditor in whole or in part.
Distribution of assets
76 (1) After the notices required by sections 74 and 75 have been given, the respective times
specified in the notices have expired and all claims of which proof has been required by due
notice in writing by the liquidator in that behalf have been allowed or disallowed by the court in
whole or in part, the liquidator may distribute the assets of the company or any part of those
assets among the persons entitled to them and without reference to any claim against the
company, or, in the case of an authorized foreign bank, against the authorized foreign bank in
respect of its business in Canada, that has not then been sent to the liquidator.
Claims not sent in
(2) The liquidator is not liable to any person whose claim has not been sent in at the time of
distributing the assets or part thereof under subsection (1) for the assets or part thereof so
distributed.
Rank of claims sent in after distribution started
77 Where any claim or claims are sent in to the liquidator after any partial distribution of the
assets of a company, the claim or claims, subject to proof and allowance as required by this Act,
shall rank with other claims of creditors in any future distribution of assets of the company.
(-)
-2
Distribution of Property
158.1 (1) Where a winding-up order is made in respect of an authorized foreign bank, claims
shall be paid in the following order of priority:
(a) charges, costs and expenses, including the remuneration of the liquidator, incurred in the
winding-up of the business in Canada of the authorized foreign bank and of the liquidation of its
assets;
(b) claims of preferred creditors, specified in section 72; and
(c) debts and liabilities of the authorized foreign bank in respect of its business in Canada in
order of priority as set out in sections 625 and 627 of the Bank Act.
Distribution and release of surplus assets
(2) Any assets that remain after payment of the claims referred to in paragraphs (1)(a) to (c) are
to be applied firstly in payment of interest from the commencement of the winding-up at the rate
of five per cent per annum on all claims proved in the winding-up and according to their priority.
The liquidator may, with the approval of the court, release to the authorized foreign bank any
assets remaining after payment of the interest.
3
Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5
Collection without knowledge or consent
7 (1) For the purpose of clause 4.3 of Schedule 1, and despite the note that accompanies thatclause, an organization may collect personal information without the knowledge or consent ofthe individual only if
(a) the collection is clearly in the interests of the individual and consent cannot beobtained in a timely way;
(b) it is reasonable to expect that the collection with the knowledge or consent of theindividual would compromise the availability or the accuracy of the information andthe collection is reasonable for purposes related to investigating a breach of anagreement or a contravention of the laws of Canada or a province;
(b.1) it is contained in a witness statement and the collection is necessary to assess,process or settle an insurance claim;
(b.2) it was produced by the individual in the course of their employment, business orprofession and the collection is consistent with the purposes for which theinformation was produced;
(c) the collection is solely for journalistic, artistic or literary purposes;
(d) the information is publicly available and is specified by the regulations; or
(e) the collection is made for the purpose of making a disclosure
(i) under subparagraph (3)(c.1)(i) or (d)(ii), or
(ii) that is required by law.
Use without knowledge or consent
(2) For the purpose of clause 4.3 of Schedule 1, and despite the note that accompanies thatclause, an organization may, without the knowledge or consent of the individual, use personal
information only if
(a) in the course of its activities, the organization becomes aware of information that it
has reasonable grounds to believe could be useful in the investigation of a contraventionof the laws of Canada, a province or a foreign jurisdiction that has been, is being or isabout to be committed, and the information is used for the purpose of investigating that
contravention;
(b) it is used for the purpose of acting in respect of an emergency that threatens the life,health or security of an individual;
(b.1) the information is contained in a witness statement and the use is necessary to
assess, process or settle an insurance claim;
4
(b.2) the information was produced by the individual in the course of their employment,
business or profession and the use is consistent with the purposes for which the
information was produced;
(c) it is used for statistical, or scholarly study or research, purposes that cannot be
achieved without using the information, the information is used in a manner that will
ensure its confidentiality, it is impracticable to obtain consent and the organization
informs the Commissioner of the use before the information is used;
(c.1) it is publicly available and is specified by the regulations; or
(d) it was collected under paragraph (1)(a), (b) or (e).
Disclosure without knowledge or consent
(3) For the purpose of clause 4.3 of Schedule 1, and despite the note that accompanies that
clause, an organization may disclose personal information without the knowledge or consent of
the individual only if the disclosure is
(a) made to, in the Province of Quebec, an advocate or notary or, in any other province, a
barrister or solicitor who is representing the organization;
(b) for the purpose of collecting a debt owed by the individual to the organization;
(c) required to comply with a subpoena or warrant issued or an order made by a court,
person or body with jurisdiction to compel the production of information, or to comply
with rules of court relating to the production of records;
(c.1) made to a government institution or part of a government institution that has made a
request for the information, identified its lawful authority to obtain the information and
indicated that
(i) it suspects that the information relates to national security, the defence of
Canada or the conduct of international affairs,
(ii) the disclosure is requested for the purpose of enforcing any law of Canada,
a province or a foreign jurisdiction, carrying out an investigation relating to
the enforcement of any such law or gathering intelligence for the purpose of
enforcing any such law,
(iii) the disclosure is requested for the purpose of administering any law of
Canada or a province, or
(iv) the disclosure is requested for the purpose of communicating with the
next of kin or authorized representative of an injured, ill or deceased
individual;
(c.2) made to the government institution mentioned in section 7 of the Proceeds of Crime
(Money Laundering) and Terrorist Financing Act as required by that section;
(d) made on the initiative of the organization to a government institution or a part of a
government institution and the organization
5
(i) has reasonable grounds to believe that the information relates to acontravention of the laws of Canada, a province or a foreign jurisdiction thathas been, is being or is about to be committed, or
(ii) suspects that the information relates to national security, the defence ofCanada or the conduct of international affairs;
(d.1) made to another organization and is reasonable for the purposes of investigating abreach of an agreement or a contravention of the laws of Canada or a province that hasbeen, is being or is about to be committed and it is reasonable to expect that disclosurewith the knowledge or consent of the individual would compromise the investigation;
(d.2) made to another organization and is reasonable for the purposes of detecting orsuppressing fraud or of preventing fraud that is likely to be committed and it isreasonable to expect that the disclosure with the knowledge or consent of the individualwould compromise the ability to prevent, detect or suppress the fraud;
(d.3) made on the initiative of the organization to a government institution, a part of agovernment institution or the individual's next of kin or authorized representative and
(i) the organization has reasonable grounds to believe that the individual hasbeen, is or may be the victim of financial abuse,
(ii) the disclosure is made solely for purposes related to preventing orinvestigating the abuse, and
(iii) it is reasonable to expect that disclosure with the knowledge or consent ofthe individual would compromise the ability to prevent or investigate theabuse;
(d.4) necessary to identify the individual who is injured, ill or deceased, made to agovernment institution, a part of a government institution or the individual's next of kin
or authorized representative and, if the individual is alive, the organization informs thatindividual in writing without delay of the disclosure;
(e) made to a person who needs the information because of an emergency that threatens
the life, health or security of an individual and, if the individual whom the information is
about is alive, the organization informs that individual in writing without delay of thedisclosure;
(e.1) of information that is contained in a witness statement and the disclosure is
necessary to assess, process or settle an insurance claim;
(e.2) of information that was produced by the individual in the course of theiremployment, business or profession and the disclosure is consistent with the purposes for
which the information was produced;
(1) for statistical, or scholarly study or research, purposes that cannot be achieved without
disclosing the information, it is impracticable to obtain consent and the organizationinforms the Commissioner of the disclosure before the information is disclosed;
6
(g) made to an institution whose functions include the conservation of records of historic
or archival importance, and the disclosure is made for the purpose of such conservation;
(h) made after the earlier of
(i) one hundred years after the record containing the information was created,
and
(ii) twenty years after the death of the individual whom the information is
about;
(h.1) of information that is publicly available and is specified by the regulations; or
(h.2) [Repealed, 2015, c. 32, s. 6]
(i) required by law.
Cour
t Fi
le No. CV-
16-1
1290
-00C
LIN THE MATTER OF MAPLE BANK GmbH
AND IN THE MATTER OF THE WINDING-UP AND RESTRUCTURING ACT, R.
